Border and Border and Ors

[2008] FamCA 689

FAMILY COURT OF AUSTRALIA

BORDER & BORDER AND ORS [2008] FamCA 689

FAMILY LAW – PROCESS AND PROCEDURE - Adjournment

Family Law Act 1975 (Cth)

Hoyt’s Proprietary Limited v Spencer (1919) 27 CLR 133
Equuscorp Pty Limited v Glengallan Investments Pty Limited (2004) 218 CLR 471

APPLICANT: Mr Border

1^st RESPONDENT: Ms Border

2^nd  RESPONDENT: G Limited

3^rd RESPONDENT: MA Pty Ltd

4^th RESPONDENT: Mr V, Mr B and Mr F, t/a VFB Lawyers

FILE NUMBER: SYF 3823 of 2005

DATE DELIVERED: 15 August 2008

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Justice Fowler

HEARING DATE: 17 July 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Richardson SC, with Mr Schonell, Counsel

COUNSEL FOR THE 1^ST RESPONDENT: Mr Simpson, SC with
Ms Judge, Counsel

SOLICITOR FOR THE 2^ND RESPONDENT: Mr Cowdery

COUNSEL FOR THE 3^RD RESPONDENT: Ms Moisidis

SOLICITOR FOR THE 4^TH RESPONDENT: Mr B

Orders

THE COURT NOTED that it is asserted that the respondent husband is in hospital this day.

AND IT IS ORDERED THAT:

1. Leave is granted to inspect documents produced on subpoena at 11.00 am tomorrow and not before.

2. The 2^nd respondent is joined to the proceedings as a party.

3. The 3^rd respondent is joined to the proceedings as a party.

4. Each of the 2^nd and 3^rd respondents file within 7 days a Notice of Address for Service.

5. Any evidence relied upon by the applicant in support of the Application be served on the 2^nd and 3^rd respondents within 14 days and any affidavits in reply to be filed and served within 28 days.

6. Leave is granted to the husband to make an oral application for an adjournment.

7. The matter is adjourned conditionally to a date to be fixed, noting:

   (a)

   the earliest available dates offered by the Court on 17, 18 and

   
   

   19 September 2007, before Justice Fowler, were not suitable to all parties

   (b)the following applications are adjourned for determination:

   (i)husband’s Case Application filed 15 February 2008

   (ii)husband’s Case Application filed 27 February 2008

   (iii)wife’s Case Application filed 2 May 2008

   (iv)wife’s Case Application filed 15 July 2008.

8. The 4^th respondent is joined to the proceedings as a party.

9. Leave is granted to the wife to make oral applications:

   (a)for leave to photocopy documents produced pursuant to subpoena by Westpac, and that leave is granted.

   (b)for leave to publish copies of those documents to the office of the Legal Services Commissioner in support of a proposed complaint to be made by her to the Commissioner and that leave is granted.

10. The wife file within seven days any additional material on which she wishes to rely in relation to her application against the 4^th respondent for costs.

11. The 4^th respondent file any evidence in chief on which they wish to rely in response to that material within a further 21 days.

12. Leave is granted to approach the Listing Co-ordinator for hearing dates for three days.

13. Further to the husband’s application for an adjournment, leave is granted to the wife, upon her undertaking as to damages, to make oral applications that:

    (a)the husband to forthwith transfer to the wife as trustee to sell the same  1,220,000 shares in G Limited  being the shareholding of the husband in that company which is not the subject of the restriction agreement attached to the financial statement of the husband filed  herein.

    (b)upon transfer taking place that the wife be required to apply any proceeds of sale thereof in satisfaction or reduction of the husband’s application to pay child support and spousal maintenance pursuant to the Orders made 14 February 2008, otherwise to her legal costs and disbursements in these proceedings or in reduction of her indebtedness to I Finance, with the ultimate characterisation of such receipt to be reserved to the trial judge of the property settlement proceedings.

    (c)the husband forthwith sign a demand addressed to Mr M, calling up the loan advance made by the husband to Mr M of $390,000 pursuant to the loan agreement of 9 September 2005, such call to comply with Clause 3.1 of the agreement, and to direct Mr M irrevocably to pay those funds to the solicitors for the wife such funds upon the receipt to be applied in the same manner as the second order with the characterisation of such receipt to be reserved to the trial judge of the property settlement proceedings.

14. That save as herein set forth, and pending further order, the husband is restrained from causing or permitting any act or thing to be done to deal with, transfer or encumber his shares in G Limited, including but not limited to, entering into any agreement which places any restriction upon his capacity to otherwise deal with the shares without first obtaining the wife’s consent in writing or an order of the Court.

15. In respect of that application I make the following Orders:

    (a)that save as herein set forth, and pending further order, the husband is restrained from causing or permitting any act of thing to be done to deal with, transfer or encumber his shares in G Limited, including but not limited to, entering into any agreement which places any restriction upon his capacity to otherwise deal with the shares without first obtaining the wife’s consent in writing or an order of the Court.

    (b)the husband forthwith sign an a demand addressed to Mr M, calling up the loan advance made by the husband to Mr M of $390,000 pursuant to the loan agreement of 9 September 2005, such call to comply with Clause 3.1 of the agreement, and is to direct Mr M irrevocably to pay those funds to the solicitors for the wife.  The demand and direction is to be forthwith delivered to Mr M upon its execution by the husband.

    (c)

    The solicitors for the wife are to hold all sums paid to them by

    
    

    Mr M in an interest bearing controlled monies account and at call pending further order of the Court.

    (d)The husband is ordered to do all such acts and things as may be necessary to transfer to the wife the ownership unencumbered of shares held by him in G Limited, which are not the subject of the restriction agreement annexed to the Financial Statement of the husband and filed herein, being a total of about 1,220,000.00 shares, and the wife is to hold the said shares on trust for sale to sell the same for the best price reasonably obtainable therefore in three tranches of approximately equal size, in sales separated by a period in each case of two weeks.

    (e)The wife is to pay the proceeds of the sale to a trust account held by her solicitors and irrevocably instruct them to pay and apply the said proceeds of sale in the following manner and priority:

    (i)in payment to the wife of all arrears owing and accruing as at the date upon which the proceeds of sale of the shares or any of them are received with respect to the orders for the maintenance of the wife and

    (ii)subject to the wife having made an election for private enforcement of child support, all arrears owing and accruing with respect to the support of the child of the marriage pursuant to any assessment of child support made.

16. Leave is granted to Mr M to apply on 48 hours notice with respect to the order made in relation to the loan to him within 7 days after service of this order upon him.

17. The wife’s costs of today are reserved until the further hearing of the matter.

18. Pursuant to r 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of Counsel including Senior Counsel.

19. The further hearing of the matter is adjourned to a date and time to be fixed and leave is granted to the parties to approach the Listing Co-ordinator for a date for further hearing before Justice Fowler, if possible.

20. The final characterisation of the payments made pursuant to order 15(e)(i) is be left to the discretion of the trial judge on hearing.

IT IS NOTED that publication of this judgment under the pseudonym Border & Border and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 3823  of 2005

MR BORDER

Applicant

And

MS BORDER

Respondent

REASONS FOR JUDGMENT

Introduction

1. When this matter was listed before the Court for mention earlier this week, application was made that I disqualify myself from hearing the matter.  That application was refused.

2. Matters then arose which led to the husband’s solicitor and, it appears, his then Counsel withdrawing from the hearing of the case as his representatives.

3. It was listed for hearing before me today (17 July 2008) originally to deal with an application by the husband for a review of the decision of a Judicial Registrar made on 14 February 2008.  The Orders made by the Judicial Registrar were:

   “1.That pending further order or determination of the substantive proceedings between the parties, whichever first occurs, the husband pay or cause to be paid to the wife spousal maintenance in the sum of $1600 per week commencing on 11 October 2007 and payable monthly in advance.

   2.That there be a departure from the administrative assessment of child support dated 11 September 2007 in relation to the child […] born […] November 1993 so that for the child support period from 11 September 2007 until 30 June 2009 the father shall cause to be paid child support at the monthly rate of $2 383 as well as the following expenditure that he has been paying for the child:-

   -         hospital and health insurance at the highest cover

   -         all school tuition fees and expenses

   -         part mobile telephone and home telephone

   -         part petrol

   -         part extra tuition fees

   -         part gas, electricity and water and

   -         1 stationery pack.

   3.That a sealed copy of these orders be served on the child support registrar as soon as possible.

   4.That within 42 days the husband pay to [I Finance] all monies owing thereto by the wife and the wife do all things necessary to bring to an end her contract with this financier.

   5.That not later than 30 days after service on the husband’s solicitors of each Taxation Invoice / Memorandum of Fees by the wife’s solicitors in respect of the wife’s legal costs ongoing as from 14 February 2008, the husband pay or cause to be paid to the wife’s solicitors the sum claimed in each such Invoice / Memorandum.

   6.That for the purposes of the above order the wife shall authorise and direct her solicitors to forward direct to the husband’s solicitors for payment by the husband, Taxation Invoices / Memoranda of Fees on a monthly basis for legal work performed on the wife’s behalf in these proceedings each month, such invoices to issue no later than the twenty-eighth day of each month until determination of the substantive proceedings between the parties.

   7.That the trial judge determine the character of all payments made by the husband pursuant to orders 4 and 5 above.”

4. The wife has, in the meantime, filed two applications. The wife seeks to join two companies to the proceedings, namely G Limited and MA Pty Limited, who are parties to an agreement made with the husband following the making of the orders sought to be reviewed. She is seeking orders that that agreement (the restriction agreement) be set aside under the provisions of section 106B of the Family Law Act 1975 (“the Act”) and the general law.

5. The companies were subsequently joined by consent.

6. The wife sought leave to bring an oral application for certain relief.

7. The wife sought an injunction restraining the husband from dealing in certain shares owned by him, including those shares which are the subject of the restriction agreement herein referred to.

8. The effect of the restriction agreement dated 16 June 2008 is to limit the capacity of the husband to deal with the shares held by him in a publicly listed company, G Limited (one of the parties to the agreement), until the expiration of a period of two years from the date of the agreement.

9. If that restriction were to remain it would have the effect of, to some extent, rendering the asset which appears at present to be the major asset of the parties, and worth many millions of dollars by common accord, beyond the reach of the wife and the Court at least for that time.  It may well also have some effect on the value of the shares the subject of the agreement in that it is a restriction on their marketability.

10. It is the application of the wife that that agreement be set aside under section 106B or for a number of other different reasons.

11. The husband, following the proceedings earlier this week, had to retain other solicitors and counsel when his prior solicitors announced through counsel that they had a conflict, that being they are the shareholders and directors of the company MA Pty Limited, a party to the agreement sought now by the wife to be set aside.

12. It is noted that they do not appear to be beneficial shareholders of that company.  It is also noted that they had not volunteered information as to their role in the company to the wife and those representing her.

13. It is also noted that the existence of the agreement is a significant event with both long and short term ramifications for the wife.

14. The husband clearly had a responsibility to disclose its negotiation before it was made.  His solicitors, in my view, also had a clear duty to disclose that they were shareholders of the company, a party to the agreement, even though it appears not beneficially so.

15. The authorities on disclosure are clear. Each party to proceedings under the Act has an obligation to make full and frank disclosure. A solicitor for a party must not be complicit in a party’s failure to honour that obligation.

16. Indeed, the husband has attested in his affidavit supporting his financial disclosure in the following terms, “I am aware that by law I have an obligation to make a full and frank disclosure of my financial circumstances to the Court and each other party.”

17. That obligation is a continuous obligation until judgment.

18. It seems to me that where there is an agreement of such significant impact on these proceedings and the potential rights and value of the rights of the parties to property, that it was incumbent upon the husband to disclose his intention to enter into that agreement before it was made.  Disclosure has to be meaningful and current, not opaque and historical.

19. Mr Richardson points to events which, he says, prove the husband to be disingenuous.  For example, he notes that the parties consented to orders dated on 15 September 2005, enabling the raising of money on the matrimonial home occupied by the wife, which specified as follows:

    IT IS ORDERED by consent pending further order:-

    1.That orders be made in terms of the document titled “Minutes of Proposed Interim Orders”, signed by the parties, their legal representatives and filed herein as set out hereunder:-

    “1.The Wife is ordered to forthwith and by no later than 4 p.m. on 15 September, 2005 deposit into the parties’ joint bank account with Westpac Banking Corporation account number […] the sum of $400,000.00 as cleared funds.

    2.The Wife is to retain for her own use the sum of $100,000.00 she drew from the parties joint Bank account with Westpac Banking Corporation account number […], and the Judge hearing this matter on a final basis shall determine the basis upon which the wife so retains this sum, whether as to maintenance, costs or settlement of property.

    3.The Wife is ordered to forthwith sign all documents and do all things necessary as directed by the Husband to cause the sum of $1.2 million dollars ($1,200,000.00) to be advanced to the Husband by Westpac Banking Corporation and to be secured against the parties real property situate at and known as [H1 and H2 property] ( "the home") in the State of New South Wales being the whole of the land in Folio Identifier […], with the Husband to meet all costs and expenses associated with this mortgage advance which sum is hereafter referred to as the “borrowings”.

    4.That the Husband until further Order meet the whole of the repayments on the borrowings including prior advances to the parties secured against the home and shall indemnify and keep indemnified the Wife with respect to same and the Husband shall in any event repay or refinance the borrowings within 12 months of the date of these Orders, so as to release the home as security for the borrowings.

    5.The Husband is to apply the borrowings in the sum of $1.2 million to procure the issue and allotment of fully paid ordinary shares in [G] Limited (“the shares”), provided that half of the shares are to be purchased in the name of the wife and the balance in the name of the husband.

    6.The Wife is ordered to hold the shares and not encumber or deal with same in any way pending further Order of the Court provided however that in the event that the Husband should default in his obligations to Westpac Banking Corporation or other Financial Institutions upon which any loans are secured against the home then each of the husband and wife shall forthwith sell the shares equally and in sufficient numbers to apply the proceeds thereof to repayment and discharge of the borrowings.

    7.The Wife is to sell the shares in the event they are listed on the ASX in excess of their par value, if so requested by the Husband in writing, forthwith upon such request being made by the husband and she is to  apply the proceeds of sale in repayment, reduction or discharge of the borrowings.

    8.In the event that there is any surplus after compliance by the Wife with the preceding Order, any surplus is to be held in the Wife’s Solicitors Trust Account pending further Order of the Court.

    9.The husband is restrained from disposing of, assigning, encumbering or otherwise dealing with the shareholding acquired by him in [G] Ltd pursuant to these orders except for the purpose of reducing, repaying or discharging the borrowings.

    10.Each of the parties is restrained from redrawing any sums from the parties joint redraw facility being account number […] with Westpac Banking Corporation.

    11.Until further Order, the Wife have the sole use and occupancy of the residence situate at and known as [H2 property] in the State of New South Wales and that the Husband be restrained from being further in or upon such premises other than to collect [the child] on pre-arranged contact occasions or as otherwise agreed between the parties.

    12.Until further order the Husband is to have sole use and occupancy of the residence situate and known as [H1 property] in the state of New South Wales.

    13.Note the agreement of the parties, on a without admissions basis that the Husband will:

    13.1.Maintain private medical insurance for the Wife and the parties daughter;

    13.2.That the Husband pay to the Wife’s nominated bank account the sum of $8,500 per calendar month.  Commencing 15 September 2005.

    13.3.Pay in respect of the home [H1 and H2 property] as and when same fall due:

    13.3.1all costs, expenses, rates and taxes for the home;

    13.3.2lawn mowing costs;

    13.3.3.gardening and pool maintenance expenses;

    13.3.4.electricity;

    13.3.5telephone/fax/mobile phone expense;

    13.3.6reasonable repairs; and

    13.3.7window cleaning expenses.

    13.4.Pay the school fees for the child.

    14.The Husband pay the costs of repairs required to the BMW vehicle registration number […] plus registration, running expenses and petrol and do all acts and things necessary to enable the Wife to have continued use of the said vehicle including procuring all lease payments and in the event that this vehicle is unavailable for the purpose of repairs then the Mazda vehicle shall be made available for the wife’s use.

    15.That the Husband is to meet the holiday costs and expenses for the Wife and the child of the marriage […] born […] November 1993 (“the child”):

    15.1.For travel from Sydney to the Gold Coast plus accommodation and living expenses during the first week of the forthcoming September / October private school holidays of the said child’s school in the total sum of $3,500; and

    15.2.For travel from Australia to Europe and return during the Christmas/New Years period 2005/2006 up to a cost of $16,000 and shall, transfer Frequent Flyer points as are necessary for the acquisition of the air travel tickets.

    16.It is noted that it is the intention of the husband that at the conclusion of the property proceedings the unit property at [R] (“the unit”) is to be placed in trust for the child of the marriage.

    17.That the husband shall use his best endeavours to withdraw same as security for any borrowings.

    18.It is noted that the acquisition of the shareholding in the name of the wife as provided for in Order 5 is agreed to between the parties on a without prejudice basis as to their rights in relation to property settlement and without admission by the parties as to contribution by or on behalf of the wife and with the intention that they be held in the wife’s name solely on an interim basis and for the purposes of these orders.

    19.The Wife is to forthwith resign as an employee of [C] Pty Limited and is restrained from drawing on the cheque account or any other account of [C Pty Ltd].

    20.The wife is restrained from drawing on the cheque account or any other account of [L] Pty Ltd.

    21.In the event only of the wife failing to do all acts and things necessary to give validity and effect to these orders then a Registrar or Deputy Registrar of the Family Court of the Family Court of Australia at Sydney is hereby empowered pursuant to Section 106A of the Family Law Act to do all things and to sign all documents necessary in the name of the wife to give validity and effect to these orders.

    22.For the purposes of order 3 herein the Registrar or Deputy Registrar of the Family Court of Australia at Sydney is empowered to sign all documents in the name of the wife necessary finalise the borrowing by 5 p.m. today in the event of the wife failing to sign any such document as and when requested prior to that time.

    23.That the parties costs of and incidental to these proceedings be reserved.

    23.Noted that the husband will pay for a laptop computer ordered by the wife.”

1. The purpose of the fund raising was to assist the float of the public company, G Limited, it being thought that the issue might fall short on subscription.  In the orders, there was provision for the wife to execute all necessary documents for the purpose of the loan and there was a provision that in the event that she failed to do so, the Registrar was empowered to execute the documents on her behalf.  At the relevant time Messrs Paul and Paul solicitors were acting on behalf of the wife.

2. Mr Richardson has tendered a bundle of correspondence from 7 October 2005 to 22 November 2005 setting out a debate which occurs between the solicitors representing the husband and those of the wife.  By letter dated 7 October the solicitors for the husband require of the wife that she execute certain documents required by the bank, and said to be pursuant to the orders of the Court.  On the same date the solicitor for the wife writes to the solicitor for the husband complaining about non reply to correspondence and states, inter alia:

   “The purpose of this communication is to place on record our concern at the state of affairs and to ask for your undertaking to give us due notice before seeking to approach the Registrar to have any documents signed in our client’s name or on her behalf in accordance with the Orders made.

   We say this in circumstances where the need for the Orders as to the borrowing would now appear to have completely passed.

   In the absence of anything to the contrary from you, this is obviously the position.”

3. In a further letter of 10 October 2005 the solicitors for the wife recalled to the solicitors for the husband that the borrowing was proposed in circumstances where the float was said to be liable to fail if funds amounting to $1,200,000.00 were not made available.  They go on to note that $400,000.00 had been made available but that they had not received answers to many questions that they had asked as to what happened in relation to the float and, in particular:

   “… what monies were advanced to your client (if any) in order to enable the float to be fully subscribed.”

   “In the absence of a response we will take the view that your client cannot sustain the borrowing originally sought and our client will accordingly be advised by us to make an Application to the court for rescission of the relevant order.  In the circumstances we ask that we have your response as a matter of urgency …”

4. In a reply the solicitors for the husband, said to have been emailed on

   
   10 October 2005

   , say in part:

   “The current position in this matter remains that your client is required to comply with the Orders of the Family Court of Australia at Sydney dated the 15^th September 2005, particularly Order 3.  We have received no instructions from our client to the effect that the borrowings provided for in those Orders are no longer required and in fact our current instructions are to use our best endeavours to have the Wife comply with the Orders and sign the necessary documentation from Westpac Banking Corporation that was forwarded to your office undercover (sic) of letter dated 7 October 2005 and have the same returned to Westpac Banking Corporation as soon as possible.  We propose continuing to act in accordance with our client’s instructions and in accordance with the current Orders of the Family Court of Australia.  We strongly recommend that your client also complies with the current Orders of the Family Court of Australia.

   The failure of your client to comply with Order 3 of the aforementioned Orders has resulted in our client having to take interim measures to mitigate his losses as a result of the Wife’s breach.  As a result of our clients actions, the whole of the $1.2 million loan advance may not now be required.  Your client will be provided with a full reconciliation as to the drawings on the loan advance once she complies with the Orders of the Family Court and the funds are advanced.”

   “Upon your client’s compliance with Order 3 of the Orders of the Family Court of Australia at Sydney dated 15^th September 2005 enabling the loan advance to be made as prescribed by that Order, we anticipate that our client will be able to address the other issues raised in other correspondence from your office since that date in relation to the float of [G] Limited.  Until and unless your client complies with the aforementioned Order enabling the loan advance then many of the queries you have raised in prior correspondence in relation to [G] Limited cannot be answered with any certainty or at all.  In these circumstances, we trust that you will use your best endeavours to encourage your client’s compliance with the Orders of the Family Court of Australia within the prescribed time.”

5. In response the wife’s solicitors note what they see as a continued refusal to answer their various queries concerning the float and the husband’s refusal to comply with his disclosure obligations.  They enclose a copy of an application filed in court and note that they are seeking an early return date which has yet to be advised.  They go on to say:

   “Of course it will not be necessary to seek an early listing if we could have your assurance that no attempt will be made to have the Registrar execute any documents in the name and place of our client, pursuant to the Orders.

   If that assurance can be given the matter can be dealt with without undue haste.

   Realistically, it would seem to us with respect that it would be appropriate for your client to consent to a stay until the Application can be dealt with.”

   This email is sent on 12 October 2005 and on 14 October 2005 the husband’s solicitor’s replied:

   “Please note that we do not hold any instructions to approach the Duty Registrar today.”

6. This statement, whilst no doubt accurate, was part of a flagrant supressio veri in which the suppression of the truth is a suggestion of falsehood.  It was on the 27 September 2005 that the Registrar had been persuaded to sign the documents.  The correspondence fails to disclose this.

7. With a palpable measure of frustration on the 14 October, the solicitors for the wife wrote to the solicitors for the husband and say, inter alia:

   “Will you please answer our request that you do not approach the Registrar - then we don’t need to apply for the stay.”

8. Even in response to this, a letter which gave no reassurance and which again failed to reveal what a model litigant and an honourable practitioner would have revealed is written;  it saying that the solicitors are instructed by their client not to further approach the Duty Registrar with a view to having any further documents executed, to effect the wife’s compliance with Order 3 of the Orders of the Family Court of Australia at Sydney, dated 15 September 2005.  They go on to say that consequently, there appears no need for the matter to proceed on the basis of the relevant Orders being stayed, nor is there any urgency in relation to the matter requiring any short notice.

9. Still, there is no open disclosure as one would have expected in such dealings, dealings that should be in honest and open terms.  Leaving aside whether they should have done so at all, they should have at least informed those solicitors for the wife that they had approached the court ex parte those solicitors and procured the execution of the documents.  I find this conduct not in accordance with what I would expect of an honourable member of an honourable profession.

10. By further letter dated 17 October 2005, the wife’s solicitors wrote to the Registrar noting the undertaking offered by the husband and seeking a re-listing of the matter.

11. The deception and failure to disclose in the correspondence from those representing the husband is appalling and, in my view, in clear breach of proper standards of behaviour, to say the least.

12. The monies raised, it appears, were at least in part, and it appears in substantial part, utilised by the husband for his purposes which were other than those for which it was originally sought, namely the support of the G Limited float.

13. Following this exchange a letter was received, dated 22 November 2005, in which the husband said he was unable to maintain the monthly payment to the wife of $8,500.00, and proposed that he pay $6,000.00 per month.

14. In the circumstances which have thus unfolded, I agree with Mr Richardson that the husband is disingenuous.  Mr Richardson also asserted that the husband was “playing games” and I can see in the circumstances outlined why he might think that.  It is noted that the wife has filed an affidavit in which she records a conversation with the husband in which he says words to the following effect:

    “… you should not have so much faith in the Paul’s they are never up to the task … in fact it is embarrassing I feel sorry for you …look what they did with the loan, I got to spend it all on the [office] and now you have to help pay it back … we may have to sell the house now … I am so broke …”

15. The husband seeks an adjournment of the proceedings and does so on the following grounds:

    a)firstly, that his counsel and solicitors are only instructed in the afternoon of 15 July 2008 (after the departure of his former solicitors by reason of a conflict of interests) and that they need to be able to procure instructions from their client as the matter proceeds, given their limited acquaintance with the case.

    b)secondly, the husband has filed in Court an affidavit which attests to his admission to hospital following chest pains and a complication occurring during the process of him undergoing an angiogram said to be in the nature of a perforation of a part of the body.  It is suggested that he will be in hospital for a period of time and then will be required to recuperate at home.

16. He is not present in Court today.

17. The application for adjournment is opposed by the wife.

18. In addition, leave was sought by the wife (and granted by the Court) to bring an oral application for certain orders the effect of which would be to require the husband:

    a)to transfer certain shares held by him in a public company to the wife in order that she might, as a trustee for sale, be able to sell them, and stand possessed of the proceeds and apply the proceeds to pay arrears of maintenance and child support and to discharge certain debts and to provide for legal costs - being obligations set out in the orders of Judicial Registrar Johnson the subject of review; some of which are the subject of a stay and some of which are not.

    b)An order that the husband be required to call in a certain loan made by him to one Mr M, in the sum of $390,000.00.  The loan is the subject of an agreement, some provisions of which are hereinafter set out.

19. One would have thought that the question of possible conflict might have occurred to the solicitors for the husband well prior to the last mention of this matter.  The agreement was in fact disclosed in his statement of financial circumstances filed in this Court in July, and the agreement giving rise to the conflict is dated 16 June 2008.  I reject therefore the first reason advanced as one on which he should be able to rely to seek an adjournment, having regard to the circumstances of his, and his solicitors earlier knowledge of these matters.

20. The husband has had a meeting with his new solicitors and counsel before his admission to hospital.

21. The husband is in breach of orders, the operation of which has not been stayed.

22. The husband has, it seems, the means to meet his obligations pursuant to those orders.  The information before the Court points to deception, delay and an unwillingness to honour the obligations created by the orders.

23. I do not accept that the husband has, on the evidence, no capacity to comply with the orders.  I accept that the wife does not have the ability to fund her living expenses even at the modest rate ordered by the judicial registrar nor meet her legal fees.

24. I note that the husband has retained a leading firm of solicitors and experienced and eminent senior counsel.  It seems to me that in this case there should be the same advantage afforded to the wife.

25. It is noted that there was previously before the Court an application by the husband for a review of the refusal of the Judicial Registrar to stay all of his orders but that application was not proceeded with when the matter was listed before me today.

26. Finally, the wife’s counsel seeks an injunction in terms of the injunction sought in paragraph 11 of the wife’s latest application, being in the following terms:

    “That pending further order the husband is restrained from causing or permitting any act or thing to be done to deal with, transfer or encumber his shares in [G] Limited including but not limited to entering into any agreement which places any restriction upon his capacity to otherwise deal with the shares without first obtaining the wife’s consent in writing or order of the Court.”

27. I note that the need for adjournment in these proceedings is not of the wife’s making.

28. The orders of the Judicial Registrar have been stayed as to the operation of orders 4, 5, 6 and 7 pending determination of paragraphs 2, 3 and 4 of the husband’s Application in a Case (review) filed on 15 February 2008.

29. Those orders not stayed have not been complied with.

30. Mr Simpson says that the Child Support Agency has notified the husband of its intention to commence enforcement action.

31. Mr Richardson says that his client has opted for private enforcement and will so notify the Agency.

32. Although in contention, the overwhelming evidence is that the wife cannot work.

33. Indeed, whilst putting the wife’s capacity to work in contention, the husband on the other hand suggests that she is suffering from Munchausen’s Syndrome and that her child is suffering from the effects of Munchausen’s Syndrome by proxy.  It is noted that during the marriage the husband assisted the wife in dealing with  her ill health but did not apparently raise these assertions then.  In any event, if the wife is so suffering, she is in ill health in any event.

34. The husband has asserted that he has not the capacity to meet the orders which have been made.  He points to his income.  An order for maintenance can be met out of resources other than income.  The husband has shares in a public company, G Limited, which have value, indeed it appears very significant value.  Some of those shares are presently subject to the restriction created by the agreement which the wife seeks to set aside but others of them are not.

35. It is proposed by the wife (apart from the general opposition to the adjournment) that the unrestricted shares be sold to meet the unpaid liabilities arising pursuant to the unpaid and unstayed portion of the order and the continuing liability under it.

36. In addition, the wife seeks orders as a condition of the adjournment that she be provided with funds to enable her to discharge the debt owed by her to I Finance and that there be a provision of funds to assist her in meeting her costs.  The evidence is that the costs of those funds is high and given the amount in dispute in this case, although high, represents a small sum by comparison to those assets.

37. Mr Simpson says that the sale would be a significant sale and might well affect the share price on two bases namely, that it is a sale of a significant parcel of shares and it would be seen as a sale by the majority owner of the company thereby creating uncertainty as to its future.  In addition, he says that the orders sought to be enforced by the wife are those which his client seeks to review.

38. It seems to me that I can take the step enforcing orders not stayed.

39. In addition, I can make an order changing the nature of property short of finally settling it.  It seems to me I also have the power to, to the extent it is required, to properly provide for the wife’s needs and, in the circumstances of this case, make an order to achieve that end.

40. I can also make an interim order for payment, the true nature of which can be categorised by the trial judge on the hearing of this matter.  There appears little doubt in this case that there will be sufficient funds, in the nature of assets, available for distribution between the parties to permit that to happen by a comfortable margin.

41. Mr Simpson conceded that some amelioration might be had of his second concern if the shares were first transferred to the wife for sale.  As to the contention of impact of the sale of a significant parcel of shares there is no expert evidence on this issue.  Compared to the issued capital of the company G Limited the number of shares proposed to be sold is small.

42. The husband holds, subject to restriction created by the agreement, 49,400,000 shares.  The parcel proposed to be sold of 1,220,000 shares does not, therefore, comprise more than 2.5% of the shares held by the husband.  Nevertheless, it seems to me that a combination of the transfer to the wife and a staged sale over two months will act to ameliorate the concerns expressed given that the parcel represents a shareholding which in the overall scheme of things, is not so significant.

43. In relation to the proposed call in of the loan from Mr M it is noted that Mr M is apparently a senior officer of the company G Limited.  Mr Simpson puts that he will have to sell his shares in order to repay the loan and that also will have a value effect on the balance of the shares.  There is no evidence of this and absent that evidence I cannot assume that he would have to sell the shares to repay the loan.  He may be able to borrow other monies or, for all I know of his position, simply write out a cheque.

44. The loan document which was annexed to an affidavit of the husband however contained a provision that Mr “[M] will repay the Loan Funds within 14 days of receiving notice of demand from [the husband] or such longer period as is agreed by the parties.”

45. The husband in his affidavit deposes in the following terms:

    “The loan of $390,000.00 to [Mr M] was to enable him to acquire shares in [G] Limited as [a senior officer] with the loan monies to be applied to the float.

    …

    [Mr M] is yet to repay the sum of $390,000.00 and it was always our understanding that he would repay same as soon as the share price in [G] Limited reached a level whereby he could repay the loan advance.”

46. Mr Simpson seeks to elevate this “understanding” to a binding provision preventing the husband from calling the loan until the provision is able to be met.  I think for my own part that the “understanding”, even if it were a collateral agreement is, in the terms stated, so vague as to its meaning as to be meaningless.

47. In any event Mr Richardson refers to my attention, firstly, to the case of

    
    Hoyt’s Proprietary Limited v Spencer (1919) 27 CLR 133

    and particularly pages 146-8.  Isaacs J (at 146) says:

    “A principal that must govern the bargain of a contractual promise made in consideration of entering into the main contract is that the parties shall have and be subject to all (not some only) of the respective benefits and burdens of the main contract.  When the collateral promise is truly consistent with the main contract, that principle has full play.  The main contract is not then interfered with.  The collateral contract alters, as every contract must, the contractual relations of the parties;  but it does not alter, and from the simple statement of the bargain is not intended to alter, the contractual relations which are established by the main contract.  When both are worked out, it may be that in the final outcome the parties are in the same position as if those contractual relations had been varied.  But the practical result cannot affect the independence and legal effect of each contract …”

48. The second case to which my attention was drawn was Equuscorp Pty Limited v Glengallan Investments Pty Limited (2004) 218 CLR 471.  In a joint judgment Gleeson CJ, McHugh, Kirby, Hayne and Callinan JJ said at page 483 (footnotes omitted):

    “The respondents each having executed a loan agreement, each is bound by it.  Having executed the document, and not having been induced to do so by fraud, mistake, or misrepresentation, the respondents cannot now be heard to say that they are not bound by the agreement recorded in it.  The parol evidence rule, the limited operation of the defence of non est factum and the development of the equitable remedy of rectification, all proceed from the premise that a party executing a written agreement is bound by it …  Having executed the agreement, each respondent is bound by it unless able to rely on a defence of non est factum, or able to have it rectified”.

1. It would be open to the Court to simply make an order requiring the loan to be called in.  Mr M, if he had any available remedy or defence, could litigate that in another place and at another time.  However, in the interests of economy and containment of costs it is my intention to make an order, the effect of which will enable Mr M to bring before this Court any such application as he would wish to make, in the event that he asserts he has such a remedy or defence.

2. Mr Simpson concedes that this is a case in which the issues are not that the wife should receive support from the husband but rather the quantum of that support.  The husband asserts that his capacity to pay is limited.  On the evidence before me it is clear that the wife is presently entitled to support.  Her claim for support is significant, but then so are her outgoings and the level at which she lived prior to the separation of the parties, and the needs engendered by her health and the health and needs of her daughter.

3. It is also the case that the husband asserts that the wife should receive a property settlement but not the amount she seeks.  I have considered the assets in this matter and the liabilities and the value thereof.  It cannot, in my view, be realistically asserted that even if all the claims of the wife were now met that they would, in aggregate, exceed her likely reasonable entitlement in this matter.  Mr Simpson, with characteristic candour conceded that any order that I might make could be adjusted in the hearing of the matter, and I think that is right.

4. As to the injunction sought, the problems of non disclosure and the conduct of the husband in this matter give cause for concern that, unless restrained, there will be further attempts to act in a way which will inhibit or prevent the wife making claims.  In the circumstances, although the restriction agreement exists, I think the facts referred to above sustain the application made for an injunction in order to preserve the status quo, pending the opportunity to have all matters examined more fully.

5. It is, in my view, in a case such as this, important both for her sake and the Court’s that the wife be continued to be represented.  The husband has chosen to retain counsel of the highest calibre and it seems to me that justice demands that the wife should be permitted to do likewise.  However, it is not my intention to determine the question of interim costs at this time given that a stay exists in relation to those claims.

6. It seems to me appropriate that given the husband’s application before the Court and the event of his asserted ill health, I should not presently determine the issue of the funding of the wife’s legal costs, nor the review of the quantum of support ordered by the Judicial Registrar.  However, I believe it is a matter which needs to be dealt with expeditiously, particularly since it seems to me that she, and the court, should have the benefit of continuing assistance of an appropriate level of representation.  It also seems to me that I cannot render nugatory the application for review of the Judicial Registrar’s decision in the event that I am going to grant an adjournment.

7. I will grant the request for adjournment subject to the orders herein made and set forth above.

I certify that the preceding seventy-four (74) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler.

Associate: 

Date:  15 August 2008